AUG ISM Services : Not Confidence Inspiring

JUL ISM Looking Very Nice: From JUL 48.9 to AUG 52.9, New Orders from JUL 55.3 to AUG 64.9

Investors were expecting the improvement, and many may have decided to take some money out of the market, playing it safe ahead of the government's August employment report, which comes out Friday.

"The market's priced all of this in, and a lot more, quite frankly, I can't imagine a piece of fundamental information that could meaningfully impact this market upward or downward," said Jeff Buetow, managing partner at Innealta Portfolio Advisors.

JUL ISM is GOOD! from 44.8 JUN to 48.9 JUL, New Orders 49.2 JUN to 55.3 JUL

Link to Release

JUN Non-Manufacturing ISM : 47.0

How'd I Do At Guessin'? - and - The Next Biggest Gainers Could Be...

SPY Response to JUN ISM

Wednesday It's All About the JUN ISM at 10am : MAY 42.8, JUN consensus 44.0

Link to JUN ISM Report

Link to MAY chart

Link to News Release page

Link MAY ISM report

What we're really looking for is New Orders.

Note that any PMI number below 50 is still a decrease in manufacturing activity.
44 would be a slower loss than 42.8, but that's still the same as... NFP dropping by only 300k jobs rather than the previous 400k jobs.
We'd still be losing jobs! Thus the unemployment continues to increase.

Likewise, ISM at 44 is still a contraction (or loss) in manufacturing economic activity.

Be mindful of a surprise "less than consensus" number like we saw with the consensus miss on JUN Consumer Confidence.
Consider it a down day on a miss because right on it's heels will be a likely poor NFP + unemployment number THU.

The only thing that can confuse the trading day would be a "less bad"/positive (immaterial) ADP report and a negative ISM.
If both positive then it should be a great day.
Still, be wary of THU's NFP.


10:30am update:
Headline number at 44.8 is "less bad"/favorable (although still clearly not good at all).
However, future orders are down from MAY 51.1 to JUN 49.2.
Does not bode well for JUL's headline.

Econ Events Into AUG + Prediction

As we saw from today's surprise drop JUN Consumer Confidence conensus & my own estimates can certainly be wrong.

I cannot emphasize enough how much my own bias & estimates rely on the seasonal up-swell of Existing Home sales into summer that will drop off into fall & over winter.

A lot of hopium is being placed on increasing home sales & price stabilization as a market bottom rather than my PoV that it is simply an ongoing disaster mitigation event.

Summer draws down = home sales draw down
Home sales draw down + increasing unemployment = more home inventory
More home inventory = drop in prices
Drop in prices = decreased homeowner equity/net worth
Decreased homeowner equity/net worth + increasing unemployment = decreased consumer spending
Decreased consumer spending = smaller EPSs
Smaller EPSs + same PE ratios = dropping market

If both EPSs + shrinking PE ratios = rapidly decaying market as money flows out of equities & commodities and into $USD & treasuries.

The good news is that gas prices should also drop!


"Yes", deflation concerns will be back on the table.

What I don't know is how government spending/overt jobs bills will counter any drop in consumer spending.

JUN 29 Weekly Econ Consensus & Projection

Lately a lot of importance has been erroneously placed on the widely recognized innacuracy of the ADP report.
Still, expect some ridiculous market gyrations as a result.

Link MAY ISM report


Note that any number below 50 is still a decrease in manufacturing activity.
44 would be a slower loss than 42.8, but that's still the same as... NFP dropping by only 300k jobs rather than the previous 400k jobs.
We'd still be losing jobs! Thus the unemployment continues to increase.

Likewise, ISM at 44 is still a contraction (or loss) in manufacturing economic activity.

Q2 Econ Events & Results Chart

Not all of them.
Just the biggies, like NFP, Durable Goods & Retail Sales.

I'll do Housing on another chart, later.

SPY Current & Upcoming Econ Events

Retail sales came in right on the button at 0.5% gain.

I totally fucked-up that call.
I don't believe the numbers, and I'm sure they'll be grossly revised down next month, but for today... I got it wrong.

D@mn ham.

FWIW, market should keep on going up for a few more weeks.
I think that even if all economic activity in the next month or two is flat that the market will be up.
If there was going ot be any reported weakness it would've been a lagging slump from MAY into APR.
Instead, we have a (bogus) APR Durable Goods Orders, foreclosure drenched ExHomes sales with increasing supply, declining drops in both initial claims & NFP and now a (dubious & largely flat) APR Retail Sales.
I don't see why any of this won't fare any worse going into JUL from JUN.
I'm sure the numbers will be just... ducky.



In fact, this past two weeks of infuriating, range bound consolidation should result in another short squeeze.

No rush till MAY Durable Goods two weeks away, though.
Options Expiration week is next week, so I'd expect some continuing, non-directional gyrations.
I'd be surprised if a lasting short squeeze manifested next week.